MANILA - A considerable number of Filipino businessmen are upbeat regarding the country's economic performance in the third quarter, going by the results of the latest Business Expectations Survey.

The survey, which the Bangko Sentral ng Pilipinas (BSP) released on Thursday, showed that the overall confidence index (CI) from July to September moved to positive territory, the first time since the financial crisis started in the third quarter of 2008.

At 18.4%, the CI climbed by 31.3 index points year-on-year and by 21 index points compared to the second quarter. For the last 3 months of 2009, the survey revealed a CI of 33.7%.

"The improvement in domestic macroeconomic fundamentals (i.e. subdued price pressures or declining inflation, easing interest rates, rising overseas Filipinos' remittances, and the relatively stable peso) helped lift business sentiment. Moreover, the expected seasonal pick-up in consumer demand in the last quarter of the year may have contributed to the optimistic outlook for the fourth quarter of 2009," the BSP said in a statement.

Government spending on construction helped boost the economy in the second quarter as it posted a gross domestic product (GDP) growth of 1.5% during the period. Although this was lower than the 4.2% growth recorded in the same period last year, it was an improvement compared to the revised 0.6% seen in the first quarter.

According to National Economic and Development Authority (NEDA) policy planning head Dennis Arroyo, the Philippines can surpass its 2009 growth target range of 0.8% to 1.8% on the back of higher consumption from election-related spending.

"To breach the 1.8%, you have to grow 2.6% in the next semester, which seems easy," he told reporters.

Brighter prospects

The survey revealed that all types of businesses (i.e. importers, exporters, and those engaged in dual activities) expected more favorable conditions in the third quarter as their CIs turned positive. This outlook continued for the fourth quarter as their indices were higher compared to the previous quarter.

By employment size, the survey said large firms were the most optimistic in the third quarter, while medium-sized companies were the most upbeat about the last 3 months of the year. CIs across firms were all positive for the last 2 quarters of the year.

All sectors were also bullish about the macroeconomy in the third quarter, with indices climbing both year-on-year and quarter-on-quarter. The construction sector had the brightest prospects for the country with a CI at 37.3%.

The services sector was likewise upbeat in the 3-month period at 20.2%, followed by the industry (18.8%) and wholesale and retail trade (12.8%) sectors.

Better operations, credit access

Respondents of the survey were also bullish that their operations would continue to be favorable in the third quarter as indices were higher compared to last year and in the previous quarter.

Despite the improving outlook of firms on their own operations, the survey showed that average capacity utilization from July to September slightly declined to 68.9% from last quarter's 69.2%.

The number of firms that expected tighter access to credit in the third quarter was almost equal to those who believe otherwise, as the survey's credit access index improved to -0.8% from -7.2% in the second quarter.

Meanwhile, the survey said fewer companies anticipate that the peso will weaken, that inflation will rise, and that interest rates will decline in the third quarter With reports from Reuters and Agence France-Presse